Our industry, debt settlement, has been scrutinized as a problematic industry. Commonly, consumers complain that a settlement company did nothing for them. The company charged excessive upfront fees, never spoke to their creditors, and as a result, the consumer eventually dropped out of the program after being sued by one or several creditors. How could we be sure that this portion of people was the rule and not the exception? Sometimes, negative press can alter the actual results because upset people are much more likely to voice their opinion, therefore skewing the actual or correct data.

A proper study of Debt Settlement Plans was recently conducted by Richard A. Briesch, PhD; an Associate Professor at Cox School of Business, for the ACCC (Americans for Consumer Credit Choice). In his report, “Economic Factors and the Debt Management Industry”, Briesch stated that Debt Settlement Plans (DSPs) had many positive attributes. When comparing Debt Settlement to other services in the Debt Management industry Dr. Briesch said “…the consumer welfare analysis suggests that DSPs create the greatest consumer welfare of any approach.” Consumer welfare typically refers to the benefits derived from the services provided. In other words, consumers got the most benefit from Debt Settlement programs vs. other programs in the Debt Management Industry.

For a copy of the report, go here.

While there are many companies that offer real debt consolidation plans and debt settlement options, unfortunately there are also some companies out there that that outright scam customers. These companies offer to help settle your debt for a fraction of the debt amount. Then these companies have you pay all kinds of fees before they even start working to settle your debt. But in many cases these companies do nothing more than collect these fees. They never follow through on the debt settlement options, and you are left holding the debt!

So in response to the numerous complaints against these companies the Federal Trade Commission (FTC) is attempting to set new regulations that would govern companies who offer debt consolidation plans. The biggest change proposed will limit, or completely eliminate, upfront fees and charges.

This of course would nip the problem right in the bud. The fly by night companies that are making money by charging these fees and then providing no service would have their business model destroyed. These unscrupulous businesses would literally disappear overnight.

But there could be another unintended consequence. The same new rules designed to help consumers could backfire. The new proposed rules could actually keep consumers from having any debt settlement options at all.

Companies that do offer genuine debt consolidation plans could be put out of business too. After all, these are businesses and any business needs to make money. These new rules would essentially mean that the legitimate companies would be prohibited from charging their customers for the services that they provide.

While the legislation is needed it does propose a Catch 22 situation. We're hopeful that these shady companies disappear, and are ready and willing to step in to help consumers with our debt settlement solutions.

At the root of economic theory is a simple principle; people make smart and responsible financial decisions. Given the choice to spend their money paying debt that is owed, or to spend it on let’s say going out to dinner, the responsible consumer will spend their money on paying down the debt. Unfortunately that is not always the case.

For those of you that choose to go out to dinner, you should begin to focus on what you’d like to accomplish in your life. With every dollar you earn, you choose whether to responsible or to be irresponsible. Responsible people do not spend money on non-essential items they cannot afford. Additionally, I am constantly amazed when people have hundreds of dollars in cash in their pocket, and a nice new cell phone with a custom ring tone, but haven’t sent any money to their creditors in 6 months. What’s more important, your bills or your ring tone? Do you expect to pay your bills or do you think you can magically make them disappear?

Don’t get me wrong, there are always people that are just in that tough of a spot. They just don’t have enough money coming in each month to deal with all their bills. That’s not the person I’m referring too. I’m referring to the person that makes the conscious decision to avoid their creditors and spend money on worthless items instead. What these people must understand is that spending their money on themselves instead of dealing with their bills will only injure them in the long run. This behavior hinders credit scores and can even cause depression because of financial instability. You are either in denial about your situation, or you should seek professional help.

If you want to be responsible, my recommendation would be to look into a debt consolidation program, a debt settlement program, or start to automate your bills. Create an income and expense budget to understand what you can afford. Possibly pay all your bills through your bank accounts. Set up an automatic deposit for your paycheck to go into your checking account. Total up your monthly bills for each month. Have that amount remain in your checking account and have the remainder of your funds be transferred into a savings account. Forget about your checking and allow yourself to use the money in your savings as you see fit. This will ensure that you begin to live within your means and your bills will get paid on time.

Warren Buffett, nicknamed the Oracle of Omaha, is possibly the greatest investor the world has ever seen. Once during a CNBC interview , Mr. Buffett mentioned that he could never make money if he borrowed at high interest rates. Mr. Buffett excels at capital allocation. It’s his profession and he is very, very good at it. This brings a very important question to mind. If Warren Buffett, a man (when I last checked) whose net worth is around $37 billion, says that he can’t benefit from borrowing money at high interest rates (for example 15%, - 30%), then how can an average, everyday Joe such as you and I benefit from borrowing money from a credit card that charges us 20%?

The answer is we can’t.

Let’s explore this a little further. Let’s assume that you have $20,000 in credit card debt and an annual interest rate of 20%. Usually, a creditor will have around a 2% minimum monthly payment on the account. This could result in the following situation:

Monthly Minimum Payments = $400
Monthly Interest Payments = $333.34

At a 20% interest rate, you’ll be charged around $4,000 in interest for the first year alone! Let’s look at this from another angle. What was that $20,000 spent on? Do you think it was used to buy items that will appreciate in value? Probably not. Even if the funds were used to make purchases on items that may appreciate in value, do you think those items will all appreciate at 20%? Once again, probably not.

Unless you are temporarily borrowing funds at these high interest rates, then it should be avoided all together. By “temporarily” I mean paying back the debt in a matter of a few months or so. Making the monthly minimums in this scenario just doesn’t cut it. If you should find yourself with excessive credit card debt, extremely high interest rates, and payments that you can no longer afford, debt settlement may be the right choice for you.

Is your home your castle? Do you use it to mask reckless financial planning? Are you reducing your options by consistent self abusive life styles? Interesting questions considering what is going on in our country now. Even though real estate values recently have gone down your home is still your best investment.

There is a pandemic going on, and it is not the swine flu. It is call refinanceitis. Thousands of people refinance their house in order to save money. Are they really saving money, or employing an expensive procrastination strategy, I wonder?

Individuals refinance for two reasons. The first is to lower the rate reducing their monthly payment. Does this really save money? Utilizing this strategy, that house which was bought for $200.000.00 twenty years ago is now going to cost somewhere around $900,000.00 to pay off. No savings there.

The second reason is to pay off credit card debt. Well, let’s say you were going to pay off $30,000.00 of credit card debt with the equity in your property, would you save money? That 30K over the thirty years will cost around $90,000.00, too expensive for me. Credit card debt negotiation may be a better solution. Most of these programs significantly cut the amount owed. Typically the debt is paid off in one to three years; obviously much better than paying $90,000.00.

As I said your house is your best investment. You wouldn’t allow the exterior to go without paint. That reduces the value. Similarly, be financially nicer to your home. If you don’t, when you need the equity the most, such as the time retirement, it won’t be there. Remember, the best debt is the one that is paid off quickly. Credit card debt negotiation may be your least expensive solution and fastest solution for eliminating credit card debt.

“If I settle my debt, aren’t I cheating my creditors?”

I’ve had this question asked more times than I care to remember. You are only “cheating” your creditors by going through a debt settlement program if you are not in a financial hardship. Enrolling in a debt settlement program if you are not in a financial hardship is not an advisable action. A decent and ethical settlement company should analyze your financial position prior to enrollment in order to ensure you are in the optimal position for a debt settlement program. If a consumer is in a financial hardship, debt settlement can help both the consumer and the creditors looking to collect on the outstanding debts.

The Association of Settlement Companies (TASC) is one of two organizations dedicated to legitimizing the debt settlement industry. The other company is USOBA, the United States Organization for Bankruptcy Alternatives. Our company, Burden Free Inc, is a member of USOBA. Recently TASC announced that debt settlement companies are not just a good solution for consumers who have found themselves in a challenging financial situation, but also can help creditors. According to TASC, the Debt Settlement Industry returned more than $2.2 billion in consumer debt last year. In years past consumers had no alternative to bankruptcy and therefore the creditors may have never seen that $2.2 billion.

Debt settlement provides consumers with the ability to get out from under their financial burden without having to file for bankruptcy. Once again, by providing consumers with an alternative to bankruptcy, debt settlement companies are assisting creditors in collecting funds they normally would never get.

Most people think that winning the lottery would be like having a dream come true. You could buy a new car. You could by a new house or that boat you always wanted. Looking into debt solutions would no longer be an issue. Unfortunately the reality is that this dream often turns into a nightmare for people who win the lottery.

Typically when someone wins the lottery debt settlement is the furthest thing from their mind. If you won the lottery today would you settle credit card debt, or would you go shopping? Would you manage your money, or would you start spending it? The statistics show that a lot of lottery winners do the latter, and many quickly find themselves broke. You don’t have to fall into this trap though.

It is only human to want to splurge if you have a large sum of money basically given to you. This is not to say that you can’t buy a new car and treat yourself to a few nice things. Rather, it is about moderation. A good rule of thumb would be not to spend more than 5% of your winnings right away. That way you will be left with 95% of the loot to invest.

If you don’t already have a financial advisor, get one. Professional advice can be instrumental in helping you deal with and hold onto your money. This does not mean that you should rely on your financial advisor completely though. Learn how to invest and save money yourself by reading books, taking classes and researching online to help you manage your money.

You need to set a budget. Setting a budget is not about being frugal. Instead, setting a budget is about being realistic and sensible. Think of it as figuring out how much you can afford to give yourself as an allowance without draining your new fortunes.

You can reduce the likelihood of going broke after winning the lottery if you take these simple steps to manage your money. You can buy some nice things and even take a vacation. But once the initial spending spree (which you did in moderation) is done, be smart with your winnings. You don’t want to be the next sad lottery story that hits the newsstands.

Arizona home owners who are already struggling to make ends meet may find themselves facing an unforeseen expense related to their mortgages. If you are one of these homeowners already stressed with money management woes, perhaps even to the point of exploring debt settlement options or debt consolidation plans, the state equalization property tax repeal bill might be a surprise you didn’t need. This is especially true right now with Christmas shopping right around the corner.

The repeal of the state equalization property tax means that even though the value of your home has been going down, your property taxes will go up. If you have a mortgage on your property, your property taxes are likely paid by an escrow account you set up when you took out your mortgage. You literally pay your taxes as a part of your mortgage payment which is then held in an escrow account.

In the event that property taxes go up you have the choice of making a higher monthly mortgage payment or paying the difference to the mortgage company in one lump sum when your tax bill is due. Many homeowners are surprised when they get a bill stating their escrow account does not have enough money to pay their taxes that recently increased. Will homeowners already having money management issues be able to come up with this extra expense?

Not likely. Most homeowners have to tighten their belts even more when it comes to discretionary spending as the holiday season approaches. Money management is on everybody’s minds right now, and unforeseen bills can ruin a family’s budget. Less discretionary spending means less money getting infused back into the economy. This of course refuels the recession. It is a vicious cycle.

Homeowners may not be the only ones who feel the pain from this property tax increase either. Businesses and utility companies who own large tracts of land will be facing very large property tax bill increases too. The additional expenses they incur will of course be passed on to you, the consumer already struggling to make ends meet.

Are you prepared for a possible increase to your property taxes this year? Thankfully, if you have excessive unsecured debt in addition to your mortgage problems, debt settlement options are available for these tough times.

The recession has caused agencies at all levels of government to look for debt solutions. Across the board, one of the solutions implemented has been to shift the burden of debt off of the government and on to the taxpayers. Taxes are rising throughout the United States and Canada as budget shortfalls cause government agencies to alter their budgets. It’s certainly a fact that the government has to do something to deal with its debt.

Debt settlement and debt consolidation are abundant for consumers while options for government agencies aren’t easy to come by. Nevertheless, moving the burden of debt on to taxpayers who are already struggling because of the recession doesn’t seem like a smart solution.

We have seen taxes rise in different ways at all levels of government throughout the United States and Canada. For example, New York state legislators voted last year to amend their budget in a manner that resulted in both property tax and school tax increases for residents. These changes may seem like smart debt solutions to New York legislators who have saved almost a quarter of a million dollars in the past two years as a result of the property tax change alone. However it must be remembered that this money is coming from somewhere else: the taxpayers. In a difficult economy, even the smallest increase in taxes can cause financial difficulties for individuals.

In many areas, taxpayers are already paying the bulk of the bills for the city and can’t afford to take on any more of debt to cover budget shortfalls. An example of this is seen in Vancouver, Canada where two thirds of the city’s revenue already comes from taxpayers. The city has a $1-billion annual budget with a $60 million shortfall and that $60 million has to come from somewhere. The city is looking into debt solutions that include cutting jobs and eliminating city programs. This is a no-win situation for taxpayers. Either they experience rising taxes in order to keep city workers employed and programs in place or these people and programs are cut to make up for the budget shortfall.

So what’s the solution? It’s not an easy issue to find answers to. The economy is still shaky throughout North America. Individuals are being forced to look into debt settlement, debt consolidation and loan deferment. Businesses are struggling to stay afloat through the rest of the recession. And the government is going to have to make some cutbacks of its own to reduce budget shortfalls. Hopefully they’ll come up with some creative debt solutions that don’t involve increasing taxes but also don’t cut jobs with an ever increasing unemployment rate.

Smartphones are becoming a necessity for many people today. Unfortunately these phones don’t come cheap. In addition to the initial cost of buying the phone, you have to pay for your monthly plan. People also frequently pay for additional accessories (such as improved battery chargers) and downloads from app stores for personalizing the phone. All of this can lead you into a situation where you’re spending more money than you should on a phone. If you find yourself in the position of reviewing debt consolidation plans and trying to settle credit card debt but you don’t know where your money is going then you may want to look at how much you spend on your phone each year. It’s good to know which smartphones offer the best deal in terms of their cost. Take a look at the differences between the iPhone 3GS and the Android G1 and you can see that some phones are better than others when it comes to cost.

The iPhone 3GS is generally considered a better phone than the Android G1. There’s a lot of hype about the iPhone and much of it is well-deserved. However the Android G1 is a highly capable smartphone and it may be a lot more affordable than the iPhone 3GS is. First of all, the Android phone is cheaper to purchase; it runs $50 cheaper than the iPhone 3GS when purchased with a contract and is a full $200 cheaper when bought without a contract. Moreover, the monthly bill on this phone is cheaper; the total monthly cost of an unlimited voice, messaging and data plan is approximately $35 cheaper with the Android than with the iPhone 3GS. If you don’t need an unlimited plan then you’re looking at a savings of about $35 per month when getting an average usage plan on your Android G1 compared to your iPhone 3GS.

But do you get more for your money when you spend the extra to get an iPhone? It doesn’t appear that that’s the case. The average usage plan for the Android phone gives you a full 100 extra minutes of talk time for a price that is $35 per month lower (and both phones come with unlimited data and messaging). Both phones have WiFi, GPS, voicer commands, cameras that are comparable to one another and similar battery life in terms of talk time. The iPhone 3GS does offer longer standby time before recharging is needed and it offers more on-device memory storage. However it doesn’t offer multitasking features which the Android G1 does offer. Both phones allow you to download applications from their individual stores. The iPhone store may offer more apps but it also offers more apps that cost money. The Android store is growing and can be added to by a variety of developers so costs for downloading apps vary and may be cheaper than iPhone apps depending on what you want to download.

So what does all of this boil down to? Even if you need a smartphone, you may not need the phone that you think you need. If you’re having trouble with debt then you should look into finding a smartphone that meets your needs without costing so much. There are a lot of modern phones out there that don’t have to cost as much as the one that you think you love. Plus you can further reduce what you spend on your phone by limiting the apps that you pay for and reducing your plan if you don’t need as much talk time as you have. Instead of trying to settle credit card debt later, try to reduce your spending today. Instead of looking into debt consolidation plans in the future, try to reduce how much you are adding to your debt right now. Being smart about your phone means you’re being smart about your money.

The holidays are a mixed bag of emotions for many people. On the one hand, we get excited about all of the wonderful things that we get to experience during the holiday season. On the other hand, the holidays can be a highly stressful time of year. A lot of that holiday stress comes from financial concerns that crop up during the holidays. Right after the holiday rush a lot of people have to start looking into credit card debt negotiation, debt consolidation plans and other ways to settle credit card debt because they spent too much money during the Christmas season. If you can avoid going in to debt this year then you can enjoy the holidays more fully. If you cut back on your spending in three areas – presents, travel and parties – then you should be able to minimize the amount of debt that you acquire during the holidays this year.

The biggest problem area for a lot of people is the problem of Christmas presents. There are certain people in our lives to whom we feel obligated to give Christmas presents. This ends up costing us a lot of money. If you can find a way to buy fewer presents this year then you will have found a way to minimize your need to settle credit card debt once the holidays are done. The key here is to talk to the people in your life with whom it’s reasonable to discuss the problem. Parents, adult siblings, friends and spouses are all people that you can talk to about holiday spending. Most of us are in the same position of dealing with financial difficulties and we can help each other out by relieving each other of the burden of spending a lot of money on presents. Agree to only buy gifts for the kids, do a holiday potluck instead of exchanging gifts with friends or do a “white elephant” party where each person buys for only one other person in a group. These methods reduce what you spend on Christmas presents and help you avoid the need to review debt consolidation plans at the end of the year.

Next you may want to reconsider your travel plans for the holiday season. A lot of people travel to their hometowns for the holidays. Some go for both Thanksgiving and Christmas. Others go to both their own parents’ homes and their in-laws. Consider whether or not that’s a smart Christmas investment this year. Maybe you can plan one big family get-together in the spring instead when travel fares may be cheaper. Or perhaps you can go to just one gathering instead of several. Or maybe you can get with the 21st century and use the Internet and video conferencing to bring everyone together in one space on Christmas even though you’re in different parts of the country. Barring that, at least reduce your travel costs by looking for good deals on travel, keeping costly travel activities to a minimum and eating at home with the family instead of dining out in restaurants during the trip. All of these things reduce your holiday spending and help you keep out of debt so that you don’t have to look into credit card debt negotiation after the holidays.

Finally you’ll want to make sure that you keep your spending limited when it comes to holiday parties this year. Holiday parties are pricey whether you are throwing them yourself or just attending a variety of different events. Attendees feel the need to dress up, make sure they have fresh haircuts, bring a bottle of wine with them and even bring gifts for their hosts. To keep the costs down in this area you’ll want to limit yourself to the number of parties that you choose to attend. Make do with the clothing that you have in your closet already instead of buying dressy new clothes for the event. And stick to bringing an affordable bottle of wine or even a homemade dessert rather than a gift. These things all help to make sure that you don’t rack up a bunch of credit card debt by attending holiday parties and keep you from needing to settle credit card debt later on. And all of that makes it a lot easier for you to fully enjoy the holiday season!

The Credit Card Reform Act of 2010 is one of the best things that President Obama has done for the consumers of this country so far to date. Problems with credit card debt plague a large percentage of Americans. This new act will make it much easier for consumers to avoid some of the major pitfalls of credit cards which cause debt to get so out of control. It’s important to know what the act means for you so that you can be a smarter credit card user once the act’s regulations go into effect. It’s also important to understand that now is a really great time to look into debt consolidation plans and debt settlement options so that you can start with a cleaner slate when the Credit Card Reform Act regulations take hold.

What you need to understand about the Credit Card Reform Act of 2010 is that it is designed to hold credit card companies to higher standards. These standards are designed, in turn, to protect consumers from getting themselves into excessive trouble with credit card debt. The Act makes it so that credit card companies have to keep their rates fair (by prohibiting them from raising rates in the first year and putting strict rules in place about when and how rate reviews and increases must occur). The Act also makes it much easier for you to actually pay down your debt (by requiring clear information from the credit card company about the amount of time repayment will take, prohibiting certain fees and double billing and requiring credit card companies to apply your payment to the highest interest portion of your balance first). Finally the Act makes it a lot harder for people to get a credit card when they are under the age of 21 which is important because people tend to get into the most trouble when they get credit cards at too young of an age.

What all of this means for you is that you’re going to find it easier to understand what is going on with your credit card payments and that you should find it easier to pay off your debt on new credit cards. Additionally, you’ll be dealing with much fairer credit card practices once these regulations go into effect. However it also means something for many people right now. It means that now is the best time to look into debt consolidation plans and debt settlement options for your current debt. Many of the credit card companies have begun to arbitrarily raise their interest rates knowing that this new law is going to take effect. This proactive approach by the creditors has in turn caused financial hardships for many consumers. When interest rates on credit cards increase minimum payments typically increase as well causing people’s budgets to become negative on a monthly basis. If you can get a handle on your existing debt then you can start with a clean slate when these improved rules become the norm for credit card companies. That’s the best way to take full advantage of the benefits of the Credit Card Reform Act of 2010.

Christmas is the one of the best times of year. We get to spend quality time with our loved ones, travel back to our hometowns and celebrate the ups and downs of another year gone by. However Christmas is also the worst time of the year in the sense that it is the time of year when a majority of people spend more money than during any other time throughout the year. Right after Christmas we often see people searching for smart debt settlement options so that they can settle credit card debt accrued during the holiday season. Christmas presents are the biggest reason that so much money gets spent each year. If you can save money on Christmas presents this year then you can avoid having to look into credit card debt settlement services once the season is over.

The top three ways to save money on Christmas presents this year revolve around the idea that if you get organized now then you can avoid having to deal with trying to settle credit card debt later. First, you need to look realistically at how much money you can afford to spend on Christmas presents and budget your holiday spending accordingly. Second you need to start buying now so that you have time to get good deals and do smart comparison shopping so that you can stick within your budget. And third, you have to avoid getting sucked into the holiday spending frenzy that starts with Black Friday sales and continues through Christmas Eve. If you can plan what you want to buy and shop around to buy it in a smart way then you can avoid getting yourself into the kind of holiday spending trouble that will have you looking at debt settlement options come Christmas.

The next three ways to save money on Christmas presents this year are all about finding ways to reduce the cost of the presents that you do buy. The first thing that you should look at doing is making homemade presents that are affordable to make and really give something of yourself to the recipient. Christmas cookies, photo scrapbooks and DIY crafts are great examples of good affordable Christmas gifts. Next you should look at cheaper alternatives to the gifts that you’re planning to buy. Instead of getting your nephew a Wii get him a game for the game console that he already has. And finally, don’t be ashamed to do some re-gifting. It’s totally appropriate to give an unused gift to someone else if you don’t want it for yourself. If you avoid spending too much money on presents then you can avoid having to deal with credit card debt settlement services when the New Year rolls around.

There are four more ways that you save money on Christmas presents this year and these ones have to do with the logistics of shopping and spending. First, pay with cash whenever you can because then you can avoid added fees and interest rates on credit cards. Second, look into 0% interest rate credit cards or retailer options for deferred spending so that you can buy now and pay later without any penalties. Third, make sure that you’re not spending money on yourself as you do your shopping. Many people shop in a manner akin to “one for them, one for me” which increases debt considerably. And finally, be aware that excessive holiday spending will mean that you start the New Year with a lot of debt. It’s great to settle credit card debt using the credit card debt settlement services that are available but it’s even better if you can avoid going into debt over the holiday’s altogether!